Mid cap Energy Fuels targets China's rare-earth dominance with deal for magnet maker
Energy Fuels seeks to build a vertically integrated company in rare earth metals / Photo: LinkedIn / Energy Fuels
Energy Fuels, a rare-earth processor with a market capitalization of just under $3.9 billion on the New York Stock Exchange, will acquire magnet manufacturer VAC, whose products are used in the automotive and defense industries. The deal will create the first fully integrated Western player in a market currently dominated by China.
Details
Energy Fuels will acquire the legal entities comprising the VAC group from U.S. investment firm Ara Partners.
Energy Fuels owns uranium deposits and the White Mesa Mill processing facility, the only plant in the U.S. capable of processing both uranium and rare earth elements. VAC, meanwhile, operates magnet manufacturing facilities in North America, Europe, and Asia. Combining the two companies' assets will create the first fully integrated Western rare-earth company, according to the press release.
The transaction values VAC at approximately $1.9 billion, of which Energy Fuels will pay $718 million in cash, with the remainder to be financed through the issuance of Energy Fuels stock, according to the announcement. To complete the acquisition, the company will issue approximately 65.9 million new shares at $16.12 per share, matching its closing price on Monday, the day before the deal was announced.
The company will also assume approximately $140 million of VAC's debt, according to the press release. Energy Fuels has already secured a $250 million term loan from Goldman Sachs to refinance a portion of those obligations, the company said.
Implications of the acquisition
Energy Fuels is building a fully integrated rare-earth supply chain. The market is currently dominated by China, which imposed restrictions on rare-earth exports in 2025.
The company's integrated platform is expected to source feedstock from the Donald rare-earth project in Australia, which it is developing jointly with Australia's Astron Corporation. In its first phase, the project is expected to supply up to 8,000 tons of feedstock annually, with capacity to expand to 14,000 tons. Energy Fuels says that volume would be sufficient to support production for up to 1.7 million electric vehicles.
Processing will take place at the White Mesa Mill in the U.S. In June, the Department of Defense and the Office of Strategic Capital offered Energy Fuels up to $725 million in financing to support the expansion of its facilities. The company must complete customary due diligence before receiving the funding.
Production of rare-earth metals and alloys will take place at Australian Strategic Materials' facility in South Korea and at a plant the company plans to build in the U.S. Energy Fuels announced its acquisition of the Australian company in January, but the transaction has not yet closed.
Magnet production will take place at VAC's European facilities and its recently commissioned U.S. plant.
All of this will position the combined company to serve rapidly growing demand from automakers, the aerospace and defense industries, semiconductor manufacturers, hyperscale data centers, and robotics companies, according to the press release.
Stock performance
Following the announcement of the VAC acquisition, Energy Fuels shares fell on Tuesday amid a broader selloff in U.S. markets and extended those losses Wednesday. The mid cap closed 3% lower on Wednesday.
Wall Street remains optimistic on Energy Fuels as an equity investment. The stock has seven "buy" ratings from coverage analysts, versus one "hold" recommendation. The average target price is $27 per share, implying 74% upside.
